Firing people can't save Trump from the US economy's unflattering reality

Sydney Morning Herald

3 hours ago

In response, a group of statistical agencies that goes by the name The Friends of the Bureau of Labour Statistics released its own, more factual, statement that read: 'This escalates the President's unprecedented attack on the independence and integrity of the federal statistical system. The President seeks to blame someone for unwelcome news,' it said. It's also worth noting that the group statement was issued by William Beach, who was McEntarfer's Trump-appointed predecessor at the bureau.
It's hard to overstate what Trump has done. Imagine if Anthony Albanese decided to sack the nation's chief statistician because the latest inflation data was not what the government wanted. There would, rightly, be an outcry.
Naturally, the Trump apologists have been out defending the indefensible, ignoring the fact that the bureau has always revised job numbers (up and down), no matter the occupant of the White House.
Last year, while Joe Biden was still in office, the bureau revised its jobs figures between January and July down by 340,000. But the single largest downward revision came in March and April 2020, during the early months of the COVID-19 pandemic, when the number of jobs was cut by almost 925,000.
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Revisions are part and parcel of what the Bureau of Labour Statistics does. Every month it updates its numbers as it receives more information. The monthly release, plus the revisions, are vital to policymakers (like the Federal Reserve) and investors so they can see how the economy is travelling in as close to real time as possible.
Ever since he declared a record crowd at his 2017 inauguration, Trump and reality have been at odds.
In the grand scheme of things, crowd size does not really matter. But using a Sharpie to extend the expected landfall of a hurricane, gutting agencies responsible for tracking climate change, and ignoring employment data have very real consequences.
Economists and policymakers have, for years, been worried about the statistics coming out of nations where the political leaders meddle with the numbers.
In Argentina during the 1990s, the government fired bureaucrats who released less-than-flattering inflation figures and began releasing their own (sound familiar?). Understandably, this made international investors wary and increase their premiums as protection. By 2001, the government was in a full-blown debt crisis and defaulted on $US93 billion of debt.
Greece, Turkey, Russia and China have also tried to play fast and loose with statistics over the years. It got to such a point in the case of China that outside economists used electricity consumption or satellite pictures taken at night (to see artificial light) as a de facto measure of GDP because their trust in the official numbers was so low.
As financial analyst Ned Davis told The Wall Street Journal, ' Your initial thought is, 'Are we heading toward what you see in Latin America or Turkey, where if the data doesn't look good, you fire someone, and then eventually stop reporting it?''
Just a few days before McEntarfer's sacking, Trump was saying how great the economy was travelling – and demanding the Federal Reserve cut interest rates because it was going so well.
Of course, the GDP figures did not show that (growth is slowing while inflation, at 2.7 per cent, is above the Fed's 2 per cent target rate). But Trump couldn't admit that, so he told his own story.
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Around the same time, the president claimed that his government had cut pharmaceutical prices by '1200, 1300, 1400, 1500 per cent. I don't mean 50 per cent, I mean 1400, 1500 per cent'. And he's the one who thought the Bureau of Labour Statistics was making up numbers.
The problem with making up your own numbers, or installing people who will make the numbers show what you want, is that they will be at odds with the lived experience of voters.
Just as Biden struggled to convince Americans that the cost of living was getting better while they could see the price of everyday essentials going up, saying the economy is great to people lining up for unemployment benefits has a short shelf life.
There's an adage used by economists to describe the models they use to understand the economy: Put crap in, and you get crap out.